Minnesota Republican Jeff Johnson’s ‘Read My Lips’ Problem on Taxes

Minnesota gubernatorial candidate Jeff Johnson seems to think that run-of-the-mill politician promises are enough to prove his bona fides for November’s election. In his bid to secure the Republican nomination he has refused to sign the Taxpayer Protection Pledge to Minnesota voters. The Hennepin County Commissioner stated, “I’ve never voted for a tax increase… As governor, my philosophy will not change.”

Here lies the “Read My Lips” problem. He isn’t the first person claiming to reject higher taxes while refusing to put it in writing for voters. Take Virginia’s disgraced ex-governor Bob McDonnell. When he ran for governor in 2009, he said, “I’ve been a firm believer that I’m gonna tell you exactly what I think… that I’m going to stick to my word.” He went on to say, “I have no plans to raise taxes” after refusing to sign the Taxpayer Protection Pledge. The Washington Times questioned this approach. He went on to make a tax deal with Democrats and ended up being taken to the cleaners. He signed the largest tax increase in Virginia history into law during his final year in office.

Should voters really be concerned about Mr. Johnson though? In a recent interview with the Minnesota Post Johnson claimed that “[He] do[es] believe that we need to broaden the sales tax base and lower the sales tax rate.” Will it be revenue neutral? Or will taxpayers get sacked? Taking Jeff Johnson at his word isn’t something voters are likely going to do in this political environment. He should be careful that this does not become his “Read my lips moment.” It would be easier to believe that his reforms would be revenue neutral if he allowed taxpayers to have it in writing.

Sadly, it seems Mr. Johnson is unacquainted with the political realities of tax hikes.

And the father of all politicians who thought they could play fast and loose with their campaign promises, George Bush Sr. Not even a president is exempt from keeping his word. Though he was Reagan’s chosen successor, as well as the president who oversaw the downfall of the Soviet Union and the president during a popular war, it was his tax policy which doomed him. After foolishly signing on to a deal granting congressional Democrats their tax hikes in exchange for spending cuts which never materialized, Bush lost reelection to the charismatic Bill Clinton.

There is a pattern of failure for politicians who fail to act as responsible stewards of the taxpayers. Mr. Johnson should veer away from this tax tendency and pledge his support for Minnesota’s taxpayers. This will allow him to demonstrate his willingness to be held accountable for his actions.

Call Jeff Johnson at 763-703-5154 and tell him to sign the Taxpayer Protection Pledge today.

Foreign countries are freeloading off American medical innovation according to a recent report by the White House Council on Economic Advisers.

Because of foreign price controls, the prices paid by other countries for pharmaceuticals is less than what is needed to incentivize the development of innovative new medicines. This harms foreign countries through lack of access to new medicines and harms the U.S. because prices are higher than they would otherwise be.

The U.S. healthcare system largely relies on free market forces that promote competition between various stakeholders. In comparison, most foreign developed countries utilize price controls to forcefully lower costs. In many cases, these countries are able to strong arm manufacturers into accepting lower prices, as the report notes:

“In the U.S., private insurance plans compete and make decisions that reflect the value to pharmacy benefit managers or individuals selecting plans. In contrast, if a government-run monopoly plan’s employees decide not to cover a drug, there is no risk of losing a customer because the customers cannot leave. Moreover, drug companies would often rather sell drugs at prices below the value of their products than not sell at all.”

However, this does not come without costs. By relying on price controls, these developed countries have far fewer innovative cures than the U.S. In some cases, there is a wide disparity in terms of available treatments, as the report notes:

“[M]any of the 200 top-selling drugs examined here show no quantities sold in the countries of comparison, suggesting that those drugs are not available for sale in that country. For example, in Australia, only 97 of the 200 drugs show evidence of significant sales. Similarly, Canada has only 120 of the drugs, France 109, and Germany 133.”

Where prices are artificially lower in other countries, this indirectly harms American patients and taxpayers, who shoulder a greater share of the cost of innovative medicines than they are consuming. As the report notes, this problem is increasing:

“[F]or the past 15 years, stringent government underpricing in foreign countries has substantially increased foreign free-riding on the United States. Our main finding is that prices are much lower in other developed nations than would have been predicted by income differences alone and that this discrepancy is substantially widening.”

The fact is, developing new medicines is a complex, time consuming process. A manufacturer must invest a substantial amount in research and development. In addition, the clinical development and approval times average 90.3 months for a pharmaceutical drug and 97.3 months for a biologic. Given this extensive process, there is a clear linkage between the ability of manufacturers to recoup their investment and their willingness to innovate, as the report notes:

“The gains from global sales of innovative products drive incentives for research and development, which means that the challenge of financing global biopharmaceutical R&D poses a public-goods problem.”

Some proposals, like Speaker Nancy Pelosi’s plan to impose a 95 percent excise tax on manufacturers that don’t accept government price setting, or the International Pricing Index to tie U.S. prices to prices in foreign countries, would lead to the U.S. adopting the same pricing schemes that underpay for innovation.

Not only will this harm American patients in the form of fewer treatments and worse health outcomes, it will also harm the economy because of a decline in American R&D.

Manufacturers invest over $100 billion in the U.S. economy every year, directly supporting over 800,000 jobs. When indirect jobs are included, this innovation supports 4 million jobs and $1.1 trillion in total economic impact. Pharmaceutical jobs are also high paying – the average compensation is over $126,000 – more than double the $60,000 average compensation in the U.S.

If the U.S. implements the same price controls as those utilized in other countries, these jobs will be threatened. Medical innovation will be curtailed, reducing access to medicines in the U.S. and abroad.

Rather than adopting these proposals, lawmakers should prioritize proposals that protect the free market and medical innovation and ensure that foreign countries pay their fair share.

The Republican Study Committee’s (RSC) Government, Efficiency, Accountability, and Reform (GEAR) Task Force recently released a report highlighting more than one hundred commonsense solutions to move the federal government in a smaller, smarter direction.

The report identifies three central problems that plague federal bureaucracy, the first being power. Runaway federal bureaucrats have seized power from Congress, and that has opened the floodgates for abuse of power in agencies like the IRS.

The GEAR report calls for a restoration of the proper balance of power between Congress and the Executive Branch. Notably, the report recommends (among many proposals):

Enacting the REINS Act, which would require Congress to pass a joint resolution for any major rule within 70 days of promulgation before the rule takes effect. This legislation would fundamentally change the rule-making process and save taxpayers money by expanding Congressional oversight on major rules.

Expanding use of the Congressional Review Act (CRA), which allows Congress to roll back recently promulgated regulations under an expedited parliamentary process. Expanding CRA use will allow Congress to use its rightful constitutional power to prevent the implementation of harmful, costly regulations.

Codifying that CRAs apply to “regulatory dark matter,” which would encompass so-called “guidance documents” that function as de-facto regulations. The RSC plan gives Congress an expedited avenue to strike down initiatives that do not follow the CRA process.

Enact the Article I Restoration Act, which would require federal regulations to expire every three years if not specifically authorized.

Of course, restoring the proper balance of power is only the first step in constraining runaway bureaucrats. Step two is reforming government practices with a special focus on eliminating waste. The report has many suggestions large and small for eliminating waste, including:

Improving metrics for regulatory decision-making. In the private sector, managers do not make strategic decisions without evidence. The RSC plan would hold bureaucracy to the same standard and encourage Congress to modernize the government’s collection of metrics to ensure policymakers are informed by the best data available.

Utilize excess federal office space. As of 2016, federal agencies own 3,120 vacant buildings and 7,859 underutilized buildings. The GEAR Task Force recommends that agencies sell unused buildings and lease office space (when appropriate) to like-minded organizations instead of letting the buildings waste taxpayer dollars for absolutely no reason. Citizens Against Government Waste projects that these reforms would save taxpayers $15 billion over the next five years.

Stop paying dead people. In 2016, the Social Security Administration (SSA) paid out $37.7 million in benefits to 746 dead veterans. In 2015, the SSA Inspector General identified 6.5 million individuals listed as being 112 years of age or older without any recorded death information. Embarrassingly enough, the SSA has failed to curb these improper payments to deceased individuals. GEAR Task Force Chairman Rep. Greg Gianforte (Mont. – At Large) has introduced legislation that would provide a framework for SSA to partner with state and local agencies to collect and disseminate death data.

Finally, the GEAR Task Force recommends that the federal government realign its personnel policies with those of the private sector. Namely, the report proposes:

Modernizing the hiring process so that hiring managers can efficiently and effectively recruit highly qualified candidates to fill jobs. On average, it takes federal agencies three times longer than the private sector to hire employees. The RSC plan recommends that Congress focus on two goals in streamlining the hiring process –– empowering hiring managers to recruit outside of OPM recommendations, and automating human resource functions to more efficiently utilize taxpayer funds.

Enact the MERIT Act so that managers can more easily remove toxic federal employees. Currently, it takes over 300 days to remove a bad employee due to the myriad red tape associated with the process. The MERIT Act offers a framework to realign firing procedures on the federal level with the efficient practices of the private sector. Additionally, the MERIT Act also limits retirement compensation and allows managers to recoup bonuses from employees who were later found to commit workplace violations.

Provide mandatory removal of federal employees who commit crimes. In 2016, the VA demoted (but kept on staff) an individual who was convicted of assisting an armed robbery. This plan would fully empower agencies to terminate serious criminals.

Ban taxpayer-funded union work. Under current law, federal employees are paid for engaging in union activity while on the job. The RSC plan would eliminate this and make it a fireable offense.

Enact merit-based pay in federal agencies, which would allow managers to reward employees based on performance. Under current law, there is barely a merit-based component to the existing compensation system, and federal workers are paid based on seniority and demonstrating an “acceptable level of competence.” The RSC plan recommends moving towards a merit-based pay system that rewards exception and highly-skilled employees with appropriate compensation.

The RSC GEAR Task Force report on commonsense government reform is a powerful plan of action for when Republicans take back the House majority in November. The plan is chock-full of reforms that will rein in runaway bureaucracy and leave the American people with a smaller, better, more efficient government.

Senator Pat Toomey (R-PA) has introduced the Accelerate Long-Term Investment Growth Now (ALIGN) Act to allow businesses to fully deduct business assets at the time of purchase, rather than depreciate them over an extended period of time. This provision, also known as 100 percent depreciation, was created by the 2017 Tax Cuts and Jobs Act for five years, but begins to phase out at the end of 2022.

Toomey’s bill will make full expensing permanent and should be supported by all Senators.

Full expensing gives businesses a zero percent effective rate on new investments, which incentivizes more capital flowing into the economy, leading to stronger growth. In contrast, the old system of depreciation required businesses to deduct the cost of new investments over multiple years depending on the asset they purchase, as dictated by complex and arbitrary IRS rules.

These rules create needless complexity, increased compliance costs, and could force business owners to make decisions based on tax reasons over business reasons. In fact, businesses spent over 448 million hours and $23 billion each year complying with this system when it was last in effect.

Moving to full expensing as Toomey has proposed would increase GDP by 0.9 percent, creating 172,300 additional full time jobs, according to the Tax Foundation.

Full expensing has bipartisan support. For instance, the Obama White House supported the policy and noted that it lowers the effective tax rate which encourages businesses to increase investment, create more jobs, and lift wages.

Toomey’s bill also includes a fix to allow qualified improvement property to be immediately expensed, fixing an inadvertent error in the tax bill. While this fix is bipartisan and has strong support in both the House and Senate, Democrats have so far refused to let this proposal have a vote or be attached to a broader legislative vehicle.

Toomey’s ALIGN Act is a commonsense, bipartisan proposal that will increase economic growth and build on the success of the TCJA. All Senators should support this important legislation to make full business expensing permanent.

These members should be applauded for introducing this legislation. Additionally, all members of Congress should support and co-sponsor this legislation.

CMMI was created under Obamacare with the goal of increasing efficiency of healthcare programs. The agency was tasked with conducting demonstrations over new health care delivery and payment models in Medicare, Medicaid, and the Children’s Health Insurance Program with the intent of reducing healthcare costs.

However, in its relatively short history, CMMI has pushed demonstrations with little evidence they would result in savings, while strong-arming healthcare providers and patients into participating.

The agency is also not under the normal appropriations process – Obamacare gave CMMI $10 billion every decade in perpetuity. As a result, Congress is limited in its ability to conduct routine, necessary oversight.

H.R. 5741 would help bring much needed oversight to CMMI through the imposition of several guardrails. For instance, the legislation would:

Require a public notice and comment process for any new demonstration. There are currently no requirements for public input.

Create a privileged process for Congress to block the implementation of a demonstration within 45 days of a proposed expansion from Phase 1 to Phase 2.

Set limitations on any demonstration including requiring a test to be no longer than five years and only as many participants as necessary to obtain a statistically valid sample.

Allow providers and suppliers to opt-out a demonstration if it would cause undue economic hardship.

Require monitoring of the impact any demonstration is having on beneficiaries and health disparities.

These reforms are a good first step towards reining in CMMI by providing much needed transparency, congressional oversight and stakeholder engagement.

On behalf of Americans for Tax Reform (ATR) and millions of taxpayers nationwide, I urge you to vote against H.J. Res. 76, which would nullify a recent Department of Education rule.

On September 23, 2019, the Department of Education finalized its “Borrower Defense Institutional Accountability” rule. This rule is a great victory for American students, taxpayers, and schools, and it provides some much-needed common sense reforms.

The rule helps students by giving a clear standard for discharging student loans when a school has committed a misrepresentation. It also ensures that the Department uses facts, evidence, and due process to determine if a school has misrepresented itself. This helps students and schools. Further, in order to reach a decision more quickly, this rule ends the unlawful ban on arbitration. Finally, the rule helps students complete their education even if there is a school closure.

The rule also benefits American taxpayers by ensuring that the relief that the Department gives to a student is related to the financial harm that the student has suffered. As a result of these provisions, this rule saves American taxpayers $11.1 billion over ten years. This is in stark contrast to President Obama’s 2016 Department of Education rule that was projected to cost up to $40 billion over ten years.

Finally, the Department of Education did not consider this rule lightly. In fact, the Department spent over two years working on this rule. During this time, the Department held public hearings and responded to tens of thousands of public comments.

Because the Department of Education’s rule helps students and taxpayers and was carefully considered with public comment, Senators should vote against H.J. Res. 76.

On February 5th, the Maine Heritage Policy Center (MHPC) filed an amicus brief at the U.S. Supreme Court on behalf of Professor Jonathan Reisman in Reisman v. Associated Faculties of the University of Maine. Americans for Tax Reform (ATR) and the Center for Worker Freedom (CWF) were honored to join MHPC and ten other nonprofit organizations in support of the First Amendment rights of state government workers.

The rights of state government workers, like Professor Reisman, are currently being violated. Many of these workers are forced to accept “representation” by labor unions even though they are not members of these organizations, nor do they support them. These unions have control over the workers’ wages, hours and the terms and conditions of employment. The workers are not allowed to negotiate their own terms and conditions of employment with their employer, nor can these workers choose other unions to represent them. This is known as exclusive representation. Exclusive representation or forcing workers to accept the speech of labor unions as their own is a violation of the First Amendment rights of free speech and association. The Reisman case would restore the First Amendment freedoms of these workers by ending exclusive representation.

The Reisman case began in 2018 when the Buckeye Institute filed a complaint with the United States District Court for the District of Maine. Jonathan Reisman, a professor of Economics and Public Policy at the University of Maine at Machias, argued that Maine’s law allowing a union to become the exclusive bargaining representative for public employees violates his First Amendment rights. The court unfortunately dismissed the action, citing the 1977 Supreme Court case Abood v. Detroit Board of Education. Professor Reisman appealed to the First Circuit, and that court affirmed the district court’s decision. Professor Reisman has now filed a petition for certiorari at the U.S. Supreme Court.

Interestingly, Professor Reisman is not the only one challenging exclusive representation. This case is actually one of three cases where the Buckeye Institute is representing state employees who are seeking to end exclusive representation. Kathy Uradnik of Minnesota was the first to challenge exclusive representation after the Supreme Court’s Janus v. AFSCME decision, and Jade Thompson of Ohio is also challenging exclusive representation. In the Uradnik case, the plaintiff is Kathy Uradnik, a professor of political science at St. Cloud State University in Minnesota. Her union, the Inter Faculty Organization, discriminated against nonunion faculty members by forbidding them from joining the Faculty Senate or serving on any faculty search, service or governance committee. This ban reduced their ability to obtain tenure and participate in their University.

Another plaintiff, Jade Thompson, a Spanish teacher in Ohio, also experienced similar discrimination. Her union, the Marietta Education Association, also excluded nonunion members from key committees. In addition, the union required that seniority determine who was fired during layoffs.

These cases are the next step to protect the rights of workers after the Supreme Court’s 2018 decision in Janus v. AFSCME decision. That case ensured that government workers are not forced to support unions that they have chosen not to join. These cases ensure that government workers are not represented by organizations that they do not support.

ATR and CWF strongly urge the Supreme Court to consider the Reisman case and restore the First Amendment rights of these workers.

Recent reports indicate that the Senate may consider the Prescription Drug Pricing Reduction Act (PDPRA) in the coming months. This legislation that would impose another price-setting mechanism on the U.S. healthcare system.

While supporters continue to call for full Senate consideration of this proposal, lawmakers should reject the PDPRA. The bill disrupts the existing structure of Medicare Part D and does nothing to directly help seniors.

The PDPRA imposes an inflationary rebate penalty on Medicare Part D drugs. This provision would force manufacturers to pay the government a 100 percent fee when the list price of a drug increases faster than inflation.

This provision is problematic because Part D is a system that relies on competition between several stakeholders, namely pharmacy benefit managers (PBMs), insurers, and drug manufacturers. The penalty is imposed on one Part D stakeholder, the drug manufacturer, after the price has been negotiated between several stakeholders. Essentially, the government is handcuffing the ability of manufacturers to negotiate on a level playing field with insurers and PBMs.

The Proposal Undermines Part D Competition

Some PDPRA supporters claim that this policy is nothing more than the government placing a cap on the subsidies that manufacturers receive. This is misguided –– the federal government does not pay subsidies to drug manufacturers.

The government makes payments to insurers based on the negotiated price of a drug which includes substantial discounts off the list price. In actuality, this policy will disrupt existing negotiation in Part D. In fact, as noted by Doug Badger, this policy is “at odds with the Part D program’s reliance on private entities to negotiate discounts on behalf of seniors.”

Instead of having the government directly provide care, Medicare Part D leverages competition between pharmacy benefit managers (PBMs), pharmaceutical manufacturers, plans, and pharmacies to provide coverage to seniors. This lowers costs and maximizes access for seniors.

At the core of this program is the non-interference clause which prevents the Secretary of Health and Human Services (HHS) from interfering with the robust private-sector negotiations. The Congressional Budget Office has even said that there would be a “negligible effect” on Medicare drug spending from ending non- interference.

This structure has been successful in driving down costs. Since it was first created, federal spending has come in 45 percent below projections - the CBO estimated in 2005 that Part D would cost $172 billion in 2015, but it has cost less than half that – just $75 billion. Monthly premiums are also just half the originally projected amount, while 9 in 10 seniors are satisfied with the Part D drug coverage.

Existing Part D Negotiation Already Protects Against Price Increases

“Price protection rebates” negotiated between PBMs and manufacturers are an example of existing Part D negotiation. Today, almost 100 percent of medicines are subject to these rebates.

Under these agreements, any price increase past a predetermined threshold results in increased rebates from the manufacturers to the PBM.

In effect, this establishes a private sector ceiling or cap on the amount by which the price of a medication can increase.

On the other hand, the inflationary rebate penalty could create a perverse incentive for manufacturers to automatically increase the list price of their drugs each year to keep pace with inflation.

There is Strong Opposition from Conservative Groups and Senators

While supporters of PDPRA claim that the bill is bipartisan, there is significant opposition on the right.

An amendment to strip out the inflationary rebate penalty – the key provision of PDPRA – was supported by 13 out of 15 Republican Senators on the Finance Committee when it was offered in July.

There is also strong opposition from conservative groups. Almost 20 conservative groups including ATR wrote in opposition to PDPRA when the legislation was released in July.

The Rebate Penalty Does Nothing to Directly Help Seniors

Not only is the proposal unpopular and disruptive to Part D, it would do little to directly help reduce seniors drug costs. Any revenue generated from this penalty goes directly into government coffers, not to seniors that may need help affording their medicines.

The proposal may actually have the opposite effect of crowding out the existing rebates and discounts which flow through to patients.

In sum, the inflationary rebate penalty imposes a price-fixing mechanism into the Medicare Part D system by forcing manufacturers to pay a 100 percent fee if the list price of a drug increases faster than inflation. The revenue generated from this penalty would go straight to the government, and would do nothing to directly reduce drug costs. Congress should reject the PDPRA.

Pete Buttigieg criticized Bernie Sanders over the weekend during an MSNBC interview, stating that the cost of his proposals is "bigger than the size of the entire American economy."

WATCH:

"When you do the math on [Sanders] proposals, there's a $25 trillion hole, even after his tax increase on the middle class. At $25 trillion, that's bigger than the entire size of the American economy."

The other candidates have criticized Sanders too. During last week's Democratic debate on ABC, Joe Biden said that "The idea that middle class taxes aren't going to go up is just crazy,"

At one point last year, Biden said that Sanders Medicare for all plan "is totally unrealistic and can’t be done."

Biden went on to press Sanders on how much his healthcare plan costs since he hasn't given Americans a price tag for the plan.

Amy Klobuchar even went as far as to say that she's "troubled" with the thought of having a socialist as the Democratic nominee during an interview with CBS News on Monday.

Americans for Tax Reform signed a coalition letter alongside other free-market organizations to encourage the Securities and Exchange Commission to abandon its plans to regulate the use of certain financial products and implement additional sales-practice rules between broker-dealers, investment advisors and their clients. The proposed rule will place onerous and unnecessary qualification requirements on American investors before they can freely purchase or sell certain securities openly traded in public markets.

The SEC plans to re-introduce a 2015 Obama era regulation that will inherently restrict investors ability to purchase a specific type of Exchange Traded Fund. Known as “geared” ETFs, these products are “leveraged”, meaning they typically offer investors the opportunity to earn two – three times the daily rate of return of a benchmark like the S&P 500. Like any investment product, they carry some form of risk, paired with the opportunity to earn higher returns. Geared ETFs have been available for investors to own for over 25 years, and are commonly purchased as short-term investments, rather than the buy and hold strategy of investing in government bonds that earn small but steady return from the interest on the bond.

If the SEC moves forward with its proposed regulation, the rule will require broker-dealers to collect detailed personal information. After the information is collected, the broker-dealer is then empowered to determine if their client or perspective client is “capable” of understanding the risks of this product. If the broker-dealers or investment advisors determine clients do not meet this arbitrary “capability” standard, clients and investors will be prohibited from purchasing these funds and denied an opportunity to own products that may help them achieve the higher rates of return they desire.

Furthermore, the recently implemented Regulation Best Interest laws already empower broker-dealers to decide what’s best for their clients, and the implementation of these proposed rules will only further burden investors. If the proposal is implemented in its current form, the SEC will have effectively placed themselves between investors and their trusted brokers or advisors allowing investors to only choose from options the government deems appropriate.

Norquist pointed out that all of the Democrats' proposed fiscal policies would roll back the growth we've seen under the current administration and make Americans' life savings worth less.

Norquist said:

"Everything the Democrats want to do—everything—will make your 401k worth less. This is the 401k/IRA election because the President's policies have made your life savings worth significantly more than you expected.

So, efforts to cut taxes and expand the availability of 401k/IRA-style savings remind people, not only how well you've done, but that we can do better... The Democrats will take away that which gave us this growth and this comeback."